The Week Ahead: The fraud charges leveled against Goldman Sachs by the SEC has added a new level of uncertainty for markets in terms of the next shoe to drop in the financial sector and where this will lead to next. First quarter reports by major companies such as IBM, Citigroup, Apple Computer, Microsoft, Wells Fargo, Boeing, Amazon, and Yahoo will be under a microscope. Noteworthy reports include: Leading Indicators on Monday. The Producer Price Index, Jobless Claims, and Existing Home Sales on Thursday. Durable Goods and New Home Sales on Friday.
Stocks to Watch: Goldman Sachs (GS) shares imploded by 13% on ten times normal volume. General Electric beat estimates for their Q1 earnings, but were still lower than year ago levels. Strength in its investment banking business helped Bank of America (BAC) beat Q1 estimates as the company also set aside less money for bad loans. Google (GOOG) failed to impress investors in its Q1 report as the stock fell to 3 week lows. Boston Scientific (BSX) got the FDA approval it needed to restart sales of its implantable defibrillator devices in the U.S.
Special Note: Some interesting overbought readings were recorded for the stock market not the least of which is the 30 day NYSE TRIN at levels not seen since spring of 2007. Another is the ten day average of the CBOE put/call ratio which at .46 is its lowest level in 10 years. The Volatility Index or VIX reached its lowest close since October 2007 at 16.14. Finally the Daily Sentiment Index hit an extreme at 92% bulls. These measures serve as a reminder of the higher than normal risk one assumes when entering stocks in general near term.
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